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City staff present updated financial policies, reserve approach and debt conditions
Summary
Sammamish finance staff briefed council on updated financial policies addressing revenue mix, budgeting, capital planning, reserves, debt and investments; staff will return Nov. 5 with final policy language and a reserve ordinance amendment.
City finance staff presented revised financial policies to the City Council on Oct. 21, outlining a framework for revenue strategy, budget practices, capital planning, debt management and reserves.
Finance Director Vicky Carlson said the updates formalize best practices and align policy language with the city's current structure. "The broad purpose of these financial policies is to achieve and maintain long term fiscal sustainability," Carlson told council, noting the city previously incorporated draft policies into the budget but had not formally adopted them by ordinance or resolution.
Key points included: maintaining a balanced mix of revenue sources and multi‑year projections (six years to align with the six‑year CIP); matching one‑time revenue to one‑time expenditures; budgeting to generally accepted accounting principles (GAAP); requiring capital projects to include estimates of ongoing operations and maintenance costs; and keeping enterprise funds (surface water) self‑supporting rather than subsidizing general governmental operations.
Carlson also summarized proposed reserve policy parameters. The draft preserves a general‑fund target of 25% of prior‑year ongoing expenditures, but allows up to 40% of that reserve to be deployed for short‑term emergencies or revenue shocks with a required replenishment plan. "The 25% reserve in the general fund is maintained from the existing pros policy," Carlson said, adding that more sophisticated approaches (cash‑flow and risk‑based) inform modern reserve planning.
On debt, staff said the city should build the prerequisites for issuing long‑term debt, including establishing reliable ongoing revenue sources to support repayment and maintaining fiscal policies that support a favorable bond rating. Carlson noted the City is not ready for a bond issuance yet and referenced the three‑legged approach developed in the fiscal sustainability task force: internal budget adjustments, the recently enacted utility tax and a voter‑approved revenue source (such as a metropolitan park district) to provide a stable revenue base.
Staff will return to council on Nov. 5 with the revised policies for adoption and with an ordinance amendment regarding reserves. Council members asked clarifying questions about use of one‑time revenues in emergencies and about the city's current investing practice (the city participates in the Washington State investment pool). No formal action was taken Oct. 21.
